Law firm sued over alleged role in investment scheme involving Derry man
A Pittsburgh law firm was sued on Monday for its alleged role in an investment scheme involving a Derry man who vanished in 2009 and who has been on the run from federal authories following his indictment for mail and wire fraud, according to court documents.
Meyer Unkovic & Scott was sued by Joseph Labriola, the liquidating receiver for East Haven Investments, a Monroeville-based firm operated by Frank Guzik Jr.
Guzik purchased, renovated and then sold homes while soliciting investors with promises of returns ranging from 8 percent to 14 percent, according to the suit.
The action was filed by attorney Eric T. Smith of Schnader Harrison Segal & Lewis of Pittsburgh, which is seeking more than $11.2 million in damages from Meyer Unkovic & Scott for its alleged role in the scheme.
The complaint alleges violations of Pennsylvania Unfair Trade Practices and Consumer Protection laws as well as professional negliegence.
Meyer Unkovic & Scott agreed to serve as an independent third party for East Haven, which had solicited investors for Guzik's scheme, according to the suit.
Guzik approached the firm in May 2004 about acting as an independent third party for East Haven. Two months later, the firm agreed to serve in that role.
The law firm's job, according to the complaint, was to protect the money investors gave Guzik. Investments were sent by wire to East Haven and were to be released to Guzik once he and the law firm signed the document, according to the suit.
“Investors were assured in the prospectus that the firm would represent their interests and provide oversight to ensure the safety of the invested funds including overseeing all lending activities and signing off on each disbursement of investors' money,” Smith said. “Obviously, something failed in their oversight that was supposed to be provided by the law firm.”
Attorneys Dennis Unkovic and managing partner Patricia Dodge did not respond to requests for comment.
Smith said investors lost $3.3 million with East Haven, but he is seeking triple damages and fees for Meyer Unkovic & Scott's handling of the investments.
After East Haven collapsed and Guzik disappeared, Labriola was appointed receiver of the company and charged with the task of closing the business and distributing any remaining money. When he began examing East Haven's financial records, he discovered there was no money left.
While he was in business, Guzik allegedly solicited more than $14 million from 105 investors in a “house flipping” scheme. A federal grand jury charged that he provided investors with multiple mortgages on the same properties and used the mails and electronic banking transfers to accomplish his fraud.
No one has seen Guzik since 2009, when he vanished after cleaning out $249,000 from a bank account. The IRS later said Guzik was last seen in Texas, where he purchased $200,000 in untraceable gold coins from a precious metals dealer.
A business associate, Bonnie Gardner, 45, faces trial this summer for conspiracy, wire and mail fraud, and money laundering for her alleged role in the scam, according to a federal indictment handed down last year.
Richard Gazarik is a staff writer for Trib Total Media. He can be reached at 724-830-6292 or at email@example.com.